Tuesday, 10 May 2016

$50M EXTERNALISED IN THREE MONTHS

Zimbabwe lost about $50 million to Illicit Financial Flows (IFFs) in the first quarter of 2016, as cash externalised from the country remains undetected, central bank governor John Mangudya said.

This comes as Zimbabwean banks are facing a cash crisis, with the institutions limiting depositors’ withdrawals. IFFs are a form of illegal capital flight and occur when money is illegally earned, transferred, or spent.

Mangudya said the country was still battling to curb externalisation, with the fight made even more difficult by the United States dollar which is firming against regional currencies — making it a favourable hoarding currency.

“In the past three months only, about $50 million, which we believe should not have gone out, went out of the country because the US$ is a desirable currency,” he said.
He, however, said due to the measures effected by the monetary authorities, the externalised amount is lower than recorded in prior comparable period.
The central bank chief added that the capital flight was aggravating the prevailing cash crisis.

“... externalisation risks are quite high here and this has not helped the cash situation” he said.

In his monetary policy statement earlier this year, Mangudya said Zimbabwe needed to plug the currency leakages to enable its economy to undergo sustainable and robust transformation.

Apart from the IFFs, he noted unwarranted remittances, smuggling, porous border posts, tax evasion and misappropriation of loan proceeds as leakages in the economy.
“The leakages are haemorrhaging the economy to the extent of reducing aggregate demand and causing deflation in the economy,” Mangudya said, adding that “in order to address the major challenges facing the national economy (for example unemployment, tight liquidity and lack of capital formation and confidence), prudential policy measures needed to be developed to instil discipline and transparency.”

In 2015, about $684 million made its way out of the country through IFFs, despite Zimbabwe being removed from the Financial Action Task Force (Fatf) blacklist in the same year.
According to the Fatf website, Zimbabwe was removed from the list in February 2015. Other countries on the list include Afghanistan, Angola, Iraq, Cambodia and Sudan.
The Fatf blacklist is a list of “Non-Cooperative Countries or Territories” (NCCTs); which are countries perceived to be non-cooperative in the global fight against money laundering and terrorist financing.

While the country is now off the blacklist, IFFs are still rife and cost Zimbabwe with approximately $2,6 billion having been lost in the nine years to 2012, according to a study by United States-based Global Financial Integrity (GFI).

0 comments:

Post a Comment